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County clamps down on people falsely claiming ag tax status

Some properties listed as agricultural when in fact they’re not

Davin Montoya and his family have been working the land and raising cattle in Southwest Colorado since the turn of the century.

It hasn’t always been easy, and like most ranchers and farmers who dedicate themselves to the land, it’s a labor of love. Market prices fluctuate, livestock contract diseases, drought strikes – it’s a line of work not for the faint of heart.

“There’s really not a whole lot of money in raising livestock,” Montoya said. “Most of the people that do it, do it because they have a passion for it and the lifestyle.”

So it’s at least a little relief that ranchers and farmers enjoy one perk: a long-standing tax break given to agricultural operators, put in place decades ago to provide some assistance to the people who grow our food, and as an added bonus, help preserve the open space that defines the Colorado landscape.

Davin Montoya operates Montoya Sheep & Cattle Co. near Hesperus in western La Plata County. It bothers Montoya that some people take advantage of a tax break meant to help farmers.

“We guard that as best we can because we don’t want people that aren’t in ag getting that tax break,” said Tom Compton, who has raised cattle for 50 years near Breen. “First of all, it’s not fair, and second, it’s irritating to see people with 80 acres not growing anything but weeds or prairie dogs, getting (the tax break).”

However, it is a constant problem for county governments to weed out people who declare an agricultural tax-exempt status just for the tax break. And the people who do take advantage run the gamut: Some people think they are a legit ag operation, and others just want to pay less in taxes.

In La Plata County, for instance, nearly 30 people with homes valued between $250,000 and $2.8 million lost their agriculture tax status in the past three years, according to a Colorado Open Records Act filed by The Durango Herald.

Carrie Woodson, La Plata County assessor, said her department reviews about 100 properties a year receiving the exemption that may not qualify for it.

“It’s a real issue,” Woodson said. “That’s why we actively work really hard to make sure it’s not happening. Because, most importantly, we have to be fair to people who actually do ag on their land. That’s really who we have to defend.”

Working the land

For land to qualify for agricultural tax status is pretty simple: A property owner must produce a product on the land and sell it for profit. Having horses for leisure or beekeeping to sell honey to friends are common uses that don’t count.

But the county’s tax appraisers do run into complicated situations. For example, one local rancher puts his animals on other people’s property, just so those people can declare the agricultural tax status.

In another instance, around 2012, a rancher let his cattle graze all over the newly developed Durango Ridge Ranch, west of Durango. Homeowners in the subdivision declared agricultural status, claiming their property was being used for agriculture.

A subsequent state law, prompted in part by a similar situation involving Tom Cruise’s property in Telluride, now says property owners must take part in the ag operation to claim an ag tax status.

“We can thank Tom for that,” Woodson said.

And in other cases, people truly believe their land is being put to agricultural use.

“The ag classification is for the people who put the food on all our tables,” Woodson said. “So I ask people, ‘Are you one of those people? Do you put food on our tables?’ You either do or you don’t.”

Weeding out

It’s a robust and time-consuming effort for La Plata County’s five rural appraisers who, every day, visit properties throughout the county to investigate whether a property receiving agricultural tax is a bona fide operation. Woodson said in some cases it can take up to three years to remove someone from the ag classification.

“It’s a lot of time and manpower,” Woodson said. “But we’re dealing with a lot of taxes, and it’s a very worthy project that’s only fair to farmers.”

It’s difficult to put a number to how much La Plata County loses in property taxes as a result of people skirting the system.

Rancher Davin Montoya says he wouldn’t be able to keep his cattle operation running if it weren’t for a state tax break aimed at helping people in agriculture.

But just as an example, someone with 35 acres in the prized Animas Valley whose property is valued at $500,000 with a house valued at $2 million would be paying about $9,000 in taxes per year under a residential tax status. If it were taxed as agricultural, it would be about $2,000 less.

Multiply that by hundreds of cases throughout the county, and the total cost quickly adds up.

Even ground

Shawn Martini, vice president of advocacy for the Colorado Farm Bureau, said the benefit of the ag tax break can’t be understated for ranchers and farmers in Colorado.

Whereas other businesses and industries in most cases can pass tax burdens onto the consumer by raising their product’s price, ranchers and farmers are subject to market costs out of their control.

“Because farmers can’t adjust their price, they have to absorb costs and take taxes out of their bottom line,” Martini said. “So the idea is to provide a tax break so producers don’t have to take that out of already tight margins on their products.”

Most other states, especially in the West, offer a similar grant exemption to agricultural producers, Martini said. And where it’s offered, some people take advantage.

“It’s not so much a problem with land in areas that’s been in production a long time,” Martini said. “You see it more of an issue in the urban-rural interface.”

Indeed, Woodson said the issue is more of a problem in La Plata County, where a population influx is encroaching on traditional farmlands, than in neighboring Archuleta and Montezuma counties. Sometimes, new people move into the county, buy a small ranch and expect the ag tax break, she said.

Surviving

Montoya said if he had to pay vacant land tax rates, he couldn’t afford to be in the cattle business. He’d have to close up shop on his family’s third-generation farm and likely sell the land to a developer who’d build a subdivision.

Not only would the history disappear. So, too, would the open space, which provides scenic views and habitat to all kinds of wildlife. A sign on his property reads: “I’d rather see a cow than a condo.” It is a reminder of what’s at stake.

Last year’s devastating drought, for instance, took a toll, forcing Montoya to sell some of his herd.

“You just got to do what you have to do to survive,” he said. “We’re gonna make it.”

jromeo@durangoherald.com

May 18, 2022
Nearly 50 properties removed from tax-exempt ag status
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